What determines a deposit
Table of Contents
1 Definition of the deposit
2 Inflow and outflow principle in the context of the income-surplus calculation
2.1 Inflow principle
2.2 Drainage principle
2.2.1 Acquisition of Current Assets
2.2.2 Acquisition of Fixed Assets
2.3 Advance payments on acquisition costs
3 Advance payments as part of excess income
3.1 Effect on depreciation
3.2 Lost deposits
4 down payments to one accounting party
5 Treatment under VAT law
5.1 Incurrence of sales tax for down payments received
5.2 Input tax deduction for advance payments made
7 Related Lexicon Articles
1. Definition of the deposit
In the case of a deposit, the fee is already paid in full or in part, although the services have not yet been carried out or have not yet been carried out in full. These are advance payments that are made in fulfillment of an acquisition transaction to be carried out at a later point in time (see also H 7a [advance payments on acquisition costs] EStH). Payments that do not result in the repayment of the purchase price debt are not advance payments. They can consist of cash payments or deliveries or other services (in the case of an exchange or exchange-like turnover). Down payments must relate to a specific delivery or other service. This must be assessed according to the circumstances of the individual case. Down payments without a specific service agreement can be a mere grant of credit.
2. Inflow and outflow principle in the context of the income-surplus calculation
2.1. Inflow principle
In the context of the → income surplus calculation, prepayments received are to be recorded as operating income at the time they are received (Section 11 (1) EStG). It does not matter whether it is down payments or advance payments for services to be provided or for assets to be delivered. The sales tax included in the down payment (Section 13 Paragraph 1 No. 1a) Clause 4 UStG) also represents operating income at the time of receipt.
2.2. Drainage principle
2.2.1. Acquisition of current assets
Advance payments made for the acquisition of current assets are to be recorded as operating expenses at the time of the outflow (Section 11 (2) EStG).
Due to the law to curb abusive tax arrangements of April 28, 2006 (Federal Law Gazette I 2006, 1095), the following adjustments have been made to the determination of profits through the income statement: The acquisition or production costs
for non-depreciable flat shares of the current assets,
for shares in corporations with current assets,
for securities and comparable non-securitized receivables and rights of current assets,
for land and buildings of current assets
are only at the time of the inflow of the sales proceeds or in the case of removal at the time of removal as Business expenses to be taken into account (Section 4, Paragraph 3, Clause 4 of the Income Tax Act).
2.2.2. Acquisition of fixed assets
Advance payments made for the acquisition of
Depreciable fixed assets are not immediately deductible operating expenses, but are to be distributed over the useful life from the time of delivery of the WG by means of → depreciation (Section 4 (3) sentence 3 EStG);
Non-depreciable fixed assets are not immediately deductible business expenses, but only in Time of sale as Business expenses deductible (Section 4 (3) sentence 4 EStG).
The law for the containment of abusive tax arrangements of April 28, 2006 (Federal Law Gazette I 2006, 1095) resulted in the following adjustments to the determination of profits by means of an income statement: The acquisition or production costs
for non-depreciable flat shares of fixed assets,
for shares in corporations,
for securities and comparable non-securitized claims and rights,
for land as well
Building of current assets
are only at the time of the inflow of the sales proceeds or in the case of removal at the time of removal as Business expenses to be taken into account (Section 4, Paragraph 3, Clause 4 of the Income Tax Act). In addition, the above-mentioned WGs, stating the date of acquisition or production and the acquisition or production costs or the value replacing them, are to be recorded in special registers to be kept on an ongoing basis (Section 4 (3) sentence 5 EStG). According to Section 52 (10) EStG, the law of April 28, 2006 (Federal Law Gazette I 2006, 1095) is to be applied for the first time to flat shares that are acquired, manufactured or invested in business assets after May 5, 2006. The acquisition or production costs for non-depreciable WGs of fixed assets that were acquired, manufactured or invested in the business assets before 5.5.2006 are only to be taken into account as operating expenses at the time of the inflow of the sales proceeds or at the time of withdrawal.
2.3. Advance payments on acquisition costs
Advance payments on acquisition costs are payments that are made after the legally effective conclusion of the mandatory contract (R 7.2 Paragraph 5 EStR) and before the delivery of an asset on the final acquisition costs, provided that they do not exceed these. It is irrelevant whether the payments earn interest or lead to a reduction in the purchase price. Advance payments on the acquisition costs of a built-up property are to be divided up between the land and the building according to the probable ratio of the market values or partial values. No down payments are arbitrary payments. Payments can be arbitrary even if contractually agreed. A payment is not considered to be arbitrary if the economic good is delivered in the following year at the latest. When acquiring a building, the arbitrariness of payments is also not to be assumed if in the year of payment and in the following calendar year a consideration is expected to be provided that would justify the requirement of a partial amount in accordance with Section 3 (2) MaBV. If the payments are arbitrary, they are to be taken into account as a down payment in the year that precedes the year in which the request for a corresponding partial amount according to Section 3 (2) MaBV would probably be justified.
3. Advance payments within the framework of excess income
3.1. Effect on depreciation
According to the permanent ruling of the BFH (e.g. judgments of December 21, 1982, VIII R 215/78, BStBl II 1983, 410; of June 27, 1986, VIII R 30/88, BStBl II 1989, 934; of September 12, 2001, IX R 39/97, BFH / NV 2002, 968, and IX R 52/00, BFH / NV 2002, 966) are acquisition or production costs of a (depreciable) flat share intended to generate surplus income only within the scope of the depreciation ( Section 9 Paragraph 1 Clause 3 No. 7 in conjunction with Section 7 EStG) or if necessary - in addition to the normal depreciation according to Section 7 Paragraph 1 or 4 EStG (Section 7a Paragraph 4 EStG) - in the context of special depreciation. Therefore, (advance) payments on acquisition costs at the time of their performance to the seller initially have no effect under income tax law. In the case of normal depreciation according to Section 9 Paragraph 1 Clause 3 No. 7 in conjunction with Section 7 EStG, they only have an effect as income-related expenses from the acquisition of the WG - spread over its useful life. The prerequisite, however, is that the shared apartment in question has also been purchased.
3.2. Lost deposits
Based on the ruling of the BFH on advance payments for production services not rendered later (judgments of 31.3.1992, IX R 164/87, BStBl II 1992, 805; of 30.8.1994, IX R 23/92, BStBl II 1995, 306 ), on the other hand, (advance) payments on acquisition costs can also be fully deductible if the intended acquisition transaction did not materialize and repayment cannot be obtained. Such lost expenses (down payments or advance payments on acquisition or manufacturing processes) are according to constant BFH-Rspr. to be deducted as business expenses or operating expenses according to § 11 para. 2 sentence 1 EStG at the point in time at which it becomes clear that they remain without consideration and repayment cannot be obtained, i.e. there is no distribution of the expenses by way of depreciation according to Section 9, Paragraph 1, Sentence 3, No. 7 of the EStG will come into effect (see BFH judgments of 14.2.1978, VIII R 9/76, BStBl II 1978, 455; of 9.9.1980, VIII R 44/78, BStBl II 1981 , 418; from 4 July 1990, GrS 1/89, BStBl II 1880, 830). See also the BFH judgment of June 28, 2002 (IX R 51/01, BStBl II 2002, 758).
4. Advance payments to one accounting party
In the case of a balancing party, both received and paid advance payments must be capitalized or posted on the balance sheet. If a deposit has been received, both the full deposit and the VAT to be paid to the FA must be entered as a liability (gross method). The gross method can still be used after the adoption of the BilMoG (see Endert / Sepetauz, BBK No. 21, 1005).
The Stpfl. receives a deposit of € 100,000 plus € 19,000 VAT.
The following booking results:
119 000 €
Active RAP (VAT on number)
19 000 €
to the deposit received
119 000 €
to other liability (VAT)
19 000 €
In its judgment of May 14, 2014, BStBl II 2014, 968, the BFH ruled that the realization of profit in the case of planning services by an engineer does not only occur with the acceptance or submission of the final fee invoice, but rather when the claim to advance payment according to Section 8 (2) the Ordinance on Fees for Architectural and Engineering Services (HOAI) was created in 1996. The claim arises when the (partial) service (according to the HOAI) has been rendered ready for acceptance and there is a verifiable invoice as in the final invoice, i.e. the planning service must have been provided in accordance with the order. The payments on account in accordance with Section 8 (2) HOAI are not to be accounted for like down payments on pending transactions.
If the acquisition transaction is not carried out in euros but in a foreign currency, the following problems arise when converting the currency: If a down payment is made in a foreign currency, the euro amount used for this is to be capitalized as a down payment and, when the asset is received, on its income-neutral To rebook acquisition costs. The same applies to the cash payment of the purchase price.
5. Treatment under VAT law
5.1. Incurrence of sales tax for down payments received
In the case of down payments received, the VAT arises at the end of the pre-registration period in which the payment was received; in the case of → target taxation according to § 13 Paragraph 1 No. 1 Letter a Clause 4 UStG, with → actual taxation according to § 13 Paragraph 1 No. 1 Letter b UStG. Advance payments can be made in the form of cash payments, deliveries or the provision of other services (see Section 13.5, Paragraph 2 UStAE). In principle, there is an obligation to issue an invoice only when the delivery or other service has been completed. There is an exception for advance payments made, whereby the obligation according to § 14 Paragraph 5 UStG does not exist when the advance payment is agreed, but only when the payment amount is received.
If all the relevant elements of the future funeral service are precisely defined in a funeral provision contract, the tax for advance payments made thereon according to Section 13 Paragraph 1 No. 1 Letter a Sentence 4 UStG is due at the end of the pre-notification period in which the fee or partial fee is received by the service provider has been; see BFH of November 14, 2018, XI R 27/16.
5.2. Input tax deduction for advance payments made
In the case of advance payments, according to § 15 Paragraph 1 Clause 1 No. 1 Clause 3 UStG, the → input tax deduction is possible in the pre-registration period in which an invoice with a separate VAT ID is available and the payment has been made. If the entrepreneur pays a down payment for the delivery of goods or services before the down payment has been made to him, the input tax deduction must be based on his intended use at the time of the down payment.
The input tax deduction is possible for the pre-registration or taxation period in which both conditions are met for the first time. The prerequisite for the input tax deduction from invoices for deliveries for which a down payment has been made is that all the relevant elements of the taxable event, i.e. the future delivery, are already known and thus, in particular, the items of delivery are precisely defined at the time of the down payment (see BFH Judgment of August 24, 2006, VR 16/05, BStBl II 2007, 340, see Section 14.8, Paragraph 4, Clause 2).
If a property rental is intended, it depends on whether the entrepreneur wants to rent the property tax-free or waive the tax-free property rental (§ 4 No. 12 letter a UStG) in accordance with § 9 UStG. In the former case, the input tax deduction is excluded according to § 15 Abs. 2 Nr. 1 UStG, in the latter case not (BFH judgment of May 17, 2001, V R 38/00, BStBl II 2003, 434).
The recipient of the service may only deduct the tax shown in the final invoices reduced by the input tax amounts already taken into account from the partial invoices as input tax; He is not entitled to a further input tax deduction because the supplier does not (no longer) owe the tax to this extent for a turnover due to the advance invoices, but because he has wrongly reported it to this extent. If an entrepreneur has already received remuneration before the delivery or other service is performed, the tax arises in this respect at the end of the pre-notification period in which the remuneration or the partial remuneration was received (Section 13 Paragraph 1 No. 1 Letter a Clause 4 UStG), therefore due to a separate taxation event. For this reason, Section 14 (5) of the UStG requires that the partial charges received and the tax amounts attributable to them are deducted from the final invoice if the entrepreneur has accordingly issued invoices for the partial charges within the meaning of § 14 (1 to 4) UStG. Invoices for payments before the performance of the service must show that advance payments or down payments are settled, e.g. by specifying the probable time of the service. Furthermore, according to § 14 Paragraph 5 UStG in conjunction with § 14 Paragraph 4 No. 1–8, the same information must be given as in a final invoice. If this does not happen, the entrepreneur has shown a higher tax amount in the final invoice than he owes according to the law for the turnover (§ 14c para. 1 UStG). In this case, the wrongly invoiced VAT may be corrected if the input tax deduction has been reversed by the recipient of the service (ECJ judgment of 19.9.2000, case C-454/98, UR 2000, 470; BFH judgment of 22.3.2001 , VR 11/98, BFH / NV 2001, 1088). If an invoice with tax ID is issued before the agreed delivery is carried out - without receipt of the payment - the offense of Section 14 Paragraph 3 Clause 2, 2nd alternative UStG 1993 is fulfilled in any case if the invoice issuer is certain that he has made the agreed delivery will no longer perform; see BFH of February 5, 1998, V R 65/97.
The BFH (9/21/2016, V R 29/15) submitted the following legal questions to the ECJ regarding input tax deduction and the correction of down payments:
Are the requirements for the security of a service provision as a prerequisite for the input tax deduction from a down payment within the meaning of the ECJ judgment Firin C-107/13 to be determined purely objectively or from the point of view of the paying party according to the circumstances recognizable to him?
Are the member states taking into account the simultaneous creation of the tax claim and the right to input tax deduction in accordance with Art. 2 and are entitled to regulate according to Art. 186 of the VAT Directive to make the correction of tax and input tax deduction equally dependent on a repayment of the down payment?
Does the FA responsible for the payer have to reimburse the payer for the sales tax if he cannot get the down payment back from the down payment recipient? If so, does this have to be done in the assessment procedure or is a separate equity procedure sufficient for this?
Schießl, accounting for down payments, tax & studies 2007, 224; Endert / Sepetauz, sales tax on advance payments received according to the BilMoG, effects on balance sheet and bookkeeping, BBK No. 21, 1005; Ringwald, Realization of Profits in Work Contracts, NWB 32/2015, 2352.
7. Related Lexicon Articles
→ Construction work in sales tax
→ Business expenses
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